what makes the price of heating oil, diesel fuel, and gasoline change?
Weaver Energy adjusts its pricing daily, based on the market value in order pass any savings directly along to our customers. Customer often inquire about the cause of pricing fluctuations, or they will ask if prices will continue to go up or down. While we never know what the future holds, it may be helpful to share a brief explanation of the reason behind pricing fluctuations for our most popular products.
crude oil products
Gasoline, heating oil and diesel fuel are all products of the same commodity: crude oil. The price of crude oil is determined by worldwide supply and demand, and it is when crude oil supply imbalances occur that the prices of refined products can move substantially (up or down). Geopolitical tensions around the world and natural disasters can also influence pricing drastically, but those events generally have a short-term impact. Historically, prices have increased most sharply during political events such as embargos, revolutions and wars in locations that are large suppliers of crude oil. The most common natural disaster that impacts prices are hurricanes that enter the Gulf of Mexico.
The two most popular types of crude oil are WTI (West Texas Intermediate) and Brent Crude (European Crude). WTI crude is what most people are familiar with in the United States, and generally what is most closely related to the price of our refined products. The Organization of the Petroleum Exporting Countries (OPEC) is an international group made up of primarily middle eastern countries, which produce 40% of the world’s crude oil. OPEC also has the power to start and stop the production of their oil relatively quickly, and set production levels for its members, having a significant effect on the crude oil market whenever major decisions or actions are announced. OPEC’s influence has been reduced in recent years, due to the expansion of oil exploration in the United States and our ability to produce more of our own supply.
additional factors that affect pricing
As we know from experience, the prices for all three products can change rapidly if there is a disruption to the supply of crude oil, or if there are issues with pipelines or refineries. While all three are tied to crude oil prices, there are some slight differences in additional factors that can affect pricing throughout the year. Even when crude oil prices are considered stable, gasoline prices can still fluctuate due to seasonal demand and competition between regional retail gas stations. Historically, the demand for gasoline rises over the summer months, causing the average price per gallon to increase by $.50 or more.
predictability of pricing trends
If history has taught us anything, it is that there is no guarantee on the predictability of pricing trends. Even if the demand for heating oil or gasoline seems relatively cyclical, other natural, political, and economic events, as well as human error, can have a great effect on the supply of either or both products. The good news is that prices have always seemed to return to equilibrium relatively quickly, as inventories worldwide provide a cushion between supply and demand imbalances. Therefore, even as these disruptive events continue to occur throughout time, chances are that the market will remain resilient and the effects will be felt only temporarily in our local markets.
contact us
For the current pricing on all of our products for your area, please contact us at (717) 626-7169, Monday – Friday, 7:30am – 4pm. We delivery home heating oil, diesel fuels, gasoline, and kerosene to residential and commercial customers within Lancaster County and portions of Lebanon and Chester Counties. We also deliver transport loads to wholesale customers in several surrounding Pennsylvania counties. We are honored to be your hometown energy provider!